The founder of the world’s most valuable cryptocurrency company said that he does not believe the initial coin offering (ICO) funding model will prove to be anything more than a fad. Jihan Wu, CEO of bitcoin mining conglomerate Bitmain, made this claim during an interview…
The founder of the world’s most valuable cryptocurrency company said that he does not believe the initial coin offering (ICO) funding model will prove to be anything more than a fad.
Jihan Wu, CEO of bitcoin mining conglomerate Bitmain, made this claim during an interview with CoinGeek, arguing that the so-called ICO bubble is “unsustainable” and will eventually burst.
“I believe ICOs are kind of an unsustainable financial bubble. It will burst eventually,” he said. “It’s just a matter of time. I believe it’s just one year or two. Either way, it will just disappear.”
While Wu expects traditional equities — stocks, bonds, etc. — to eventually migrate to a tokenized platform, he said that the current ICO model, through which investors purchase tokens that may be regulated as securities but generally do not entitle purchasers to dividends or voting rights, will eventually collapse since investors contribute to the crowdsales purely on speculation that they can sell the tokens later at a profit.
Wu is not alone on this bearish outlook toward ICOs. Binance, the world’s largest cryptocurrency exchange, was bootstrapped through an ICO, yet the head of its recently-launched venture arm has said that the firm believes the industry is in a bubble that will eventually pop.
Bitmain, as CCN has reported, has been using its reported $1.1 billion in first-quarter profit to invest in a number of startups and established companies in the cryptocurrency industry, in addition to rapidly-expanding its global operations.
Earlier this year, Bitmain led U.S. cryptocurrency investing and trading firm Circle Internet Financial’s latest funding round, which raised $400 million.
Then, Bitmain paid $50 million to purchase a controlling stake in Opera Software AS, which has since integrated a native cryptocurrency wallet into its Android and PC web browsers.
The company has also invested in EOS creator Block.one and blockchain data storage startup Lamba, among others.
Featured Image from Chamber of Digital Commerce/YouTube
Last modified: May 20, 2020 6:05 PM UTC